Financial Results 1H2013 Highlights Income Statement Review - - PowerPoint PPT Presentation
Bank of Cyprus Group Financial Results for the six months ended 30 June 2013 Financial Results 1H2013 Highlights Income Statement Review Balance Sheet Review & Recapitalisation Corporate actions during Resolution period Restructuring
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26 November 2013
Financial Results 1H2013 – Highlights Income Statement Review Corporate actions during Resolution period Appendices Balance Sheet Review & Recapitalisation Restructuring
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Certain statements, beliefs and opinions in this presentation are forward-looking. Such statements can be generally identified by the use of terms such as “believes”, “expects”, “may”, “will”, “should”, “would”, “could”, “plans”, “anticipates” and comparable terms and the negatives of such terms. By their nature, forward-looking statements involve risks and uncertainties and assumptions about the Group that could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. We have based these forward- looking statements on our current expectations and projections about future events. Any statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which are based on facts known to and/ or assumptions made by the Group only as of the date of this presentation. We assume no obligation to update such forward -looking statements or to update the reasons that actual results could differ materially from those anticipated in such forward-looking
jurisdiction in the United States, to United States Domiciles or otherwise. The delivery of this presentation shall under no circumstances imply that there has been no change in the affairs of the Group or that the information set forth herein is complete or correct as of any date. This presentation shall not be used in connection with any investment decision regarding any of our securities, which should only be made based on expressly authorised materials from us identified as such, nor in connection with any decision whether or how to vote on any matter submitted to our stockholders. The securities issued by Bank of Cyprus Public Company Ltd have not been, and will not be, registered under the US Securities Act of 1933 (“the Securities Act”), or under the applicable securities laws of Canada, Australia or Japan. Following the Eurogroup decisions to recapitalise Bank of Cyprus via a bail-in of depositors, the Bank was placed under resolution from 25 March 2013 until 30 July 2013, a period during which it was recapitalised and restructured in accordance with the decrees issued by the Central Bank of Cyprus in its capacity as Resolution Authority. In this context, the banking and leasing operations of the Bank in Greece were sold to Piraeus Bank S.A. as per the Sale of Greek Operations of Bank of Cyprus Public Company Ltd Decree of 2013. Hence, the financial results of the Greek
The Bank acquired the operations of Cyprus Popular Bank Public Co Ltd (Laiki Bank) in Cyprus as per the Sale of certain
consolidated as from the date of the transfer, 29 March 2013. It is noted that the fair value of the transferred assets and liabilities for the purposes of accounting for the business combination of the Group is provisional in accordance with IFRSs.
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Financial Results 1H2013 – Highlights Income Statement Review Corporate actions during Resolution period Appendices Balance Sheet Review & Recapitalisation Restructuring
Following the Eurogroup decisions to recapitalise Bank of Cyprus via a bail-in of depositors, the Bank was placed under resolution from 25 March 2013 until 30 July 2013, a period during which it was recapitalised and restructured in accordance with the decrees issued by the Central Bank of Cyprus in its capacity as Resolution Authority. Due to the corporate actions that took place during this period, it is not possible to compare figures and results of the Group with past financial periods.
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€35 mn
Income Statement
Balance Sheet
criteria
Asset Quality
Capital position
* 90+ DPD are loans with a specific provision and loans past-due for more than 90 days.
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disposal of €1,4 bn
funding from Laiki Bank with consideration for the acquisition being 18,1% of the Bank’s share capital
Bank (Romania) SA
Corporate actions during Resolution
November 2013
employees, a 24% reduction in personnel numbers and a 35% reduction in staff costs on an annualised basis have been achieved
Restructu- ring
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Financial Results 1H2013 – Highlights Income Statement Review Corporate actions during Resolution period Appendices Balance Sheet Review & Recapitalisation Restructuring
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Selected lines from the Profit and Loss (€ mn ) 1H2013 1H2012 Change Total income 500 502
(285) (248) +15% Profit before impairments and restructuring costs 215 254
Provisions for impairment of loans and advances (539) (251) +115% Restructuring costs (35)
(90) (209)
(1.366)
derivatives and tax
(1.805) (134)
3,17% 3,17%
57,0% 49,4% +7,6% * On 26 March 2013, through a Decree issued by the Resolution Authority, the Group sold the loans, fixed assets and deposits of its banking and leasing operations in Greece to Piraeus Bank S.A. As a result, the majority of the Greek operations which represented the Group’s Banking activities are presented as discontinued. In addition to the loss on disposal, the Group has written off in 2012 a deferred tax asset of €0,3 bn in Greece, as this is no longer considered as recoverable due to the disposal of the Greek business of the Group.
**Excluding the restructuring costs
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430 84
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1H2013 Other income/(expenses) Insurance income Net foreign exchange income and net gains on
Net fee and commission income Net Interest Income
Total income (€ mn)
Net Interest income affected by the
months, amounting in aggregate to €3 bn (18% of total deposits) bear fixed interest rate as per the Restrictive Measures Decree Other income/(expenses) affected by loss on the revaluation of investment properties of €34 mn
Total expenses (€ mn)
In addition to above expenses: − Restructuring costs of €35 mn include the cost of Voluntary Retirement Scheme offered in Jan 2013 of €22 mn. The cost of the VRS offered in the 3rd quarter of 2013 amounted to €96 mn
173 112
1H2013 Other operating expenses Staff costs 500 285
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Financial Results 1H2013 – Highlights Income Statement Review Corporate actions during Resolution period Appendices Balance Sheet Review & Recapitalisation Restructuring
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28,4 17,0 (7,7) 4,2 (3,8) (4,1)
Evolution of deposits (€ bn) Evolution of gross loans (€ bn)
28,1 28,3 (9,4) 10,4 (0,8) 31.12.12 Sale of Greek op. Acquisition of Laiki’s op. Other actions and movement in the period 30.06.13 Bail-in of deposits
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85% 7% 8%
Gross Loans by Geography 31 December 2012
65% 25% 5% 5%
Deposits by Geography
85% 7% 8%
Deposits by Geography
53% 34% 7% 6%
Gross Loans by Geography
Russia Greece Other Countries Cyprus
30 June 2013
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Deposits % Assets Loan to deposits ratio
92% 86% 140%
31.12.11 31.12.12 30.06.13
acquisition of Laiki
On 1 August 2013 the Bank was reinstated as an eligible counterparty by the ECB for monetary policy operations. Currently ELA funding stands at €9,8 bn and ECB funding at €1,35 bn
both locally and internationally, launching new products to attract new deposits
2,2 2,1 3,7 1,35 11,1 9,8
5% 6% 10% 0% 34%
Dec-10 Dec-11 Jun-12 Dec-12 June-13 Nov-13
ELA funding (€ bn) ECB Funding (€ bn) ECB + ELA funding % Total Assets
79% 92% 51%
31.12.11 31.12.12 30.06.13
Funding from Central Banks
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90+ DPD ratio and 90+ DPD provision coverage ratio*
Erosion of loan quality continues
at €11,0 bn
days as % of gross loans (90+ DPD ratio) at 38,8%
Erosion of loan quality continues in the second half of the year whilst the Bank is working on arresting rising trends
are yielding some results, though it is too early to assess whether these actions are effective
*Loan quality and provision coverage ratios are calculated as a percentage of gross loans
33% 30% 31% 40% 35% 48% 42% 12,4% 17,2% 17,6% 18,0% 22,9% 27,4% 38,8% 31.12.10 31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 30.06.13 90+ DPD provision coverage 90+ DPD ratio
Loans in arrears >90 days (€ bn)
2,7 2,6 2,5 3,5 4,2 9,9 1,6 1,8 2,0 2,2 2,7 0,3 0,4 0,4 0,4 0,5 0,5 0,4 0,3 0,4 0,4 0,3 0,6 5,0 5,1 5,1 6,5 7,7 11,0
31.12.11 30.03.12 30.06.12 30.09.12 31.12.12 30.06.13
Other Russia Greece Cyprus
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Accumulated provisions % Gross loans
took into consideration the further expected decline in collateral values following March 2013 events
future changes in property values in Cyprus, as well as the timing for the realisation of the collateral and for taxes and expenses on the repossession and subsequent sale of the collateral
loans are expected to remain elevated for the remaining of the year
1.505 1.589 2.028 2.249 3.676 4.580
31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 30.06.13
5,2% 5,5% 7,1% 8,0% 13,1% 16,2% 31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 30.06.13
Accumulated provisions (€ mn )
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Old vs New definition of NPLs
and the new definition of NPLs as at 30 June 2013 is mainly due to not taking into account the availability of tangible collateral
previous definition vs 36,0% with new definition
New definition of Non-Performing Loans (NPLs):
than 5% of the contractual limit (threshold of 5% to be withdrawn as from 1/1/2014) and
Restructured loans remain as NPLs:
23,7% 29,1% 36,0%
31.12.12 30.06.13 Previous Definition New Definition
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Recapitalisation*
Conversion of 47,5% of unsecured deposits to equity
issued by the Bank as of 29 March 2013 bailed in and contributed through the absorption of losses
*Recapitalisation as per the Bailing-in of Bank of Cyprus Public Company Limited Decrees of 2013 up to (No. 3), issued by the Central Bank of Cyprus in its capacity as Resolution Authority. Unsecured deposits are also calculated pursuant to the provisions of the Decrees
mn
Shares before bail-in 1.795 Shares from Bail-in of Convertible Bonds 2013/2018, Capital Securities 12/2007 and Convertible Capital Securities 122 Shares from the conversion of CECS 459 Reduction of nominal value (2.353) Shares from Bail-in of deposits 3.807 Shares issued to Laiki for the acquisition
844 Shares after the bail-in 4.674 Conversion of Deposits 81% Cyprus Popular Bank 18% Shares and Debt Securities as at 29 March 2013 0,5% Nominal value of shares at €1
Shareholder’s structure
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Capital adequacy ratios Risk weighted assets (€ bn)
3,6%
10,5% 7,5% 0,6% 10,5% 7,8% 0,9% 10,7%
31.12.11 31.12.12 30.06.13
Core Tier 1 ratio Tier 1 ratio Total Capital ratio
capital adequacy by retaining internally generated capital, while its activity for restructuring and disposal of non-core assets will be driven by risk mitigation and capital considerations.
capital ratio will be set at 9% by 31 December 2013
(€ mn) 31.12.11 31.12.12 30.06.13 Shareholders’ equity 2.258 258 2.838 Core Tier I capital* 892
2.478 Hybrid capital (Tier I) 957 527 Tier I capital 1.849 120 2.478 Tier II capital 239 249 42 Total regulatory Capital 1.925 197 2.520 Risk weighted assets 24.790 21.580 23.510
24,8 21,6 23,5 31.12.11 31.12.12 30.06.13 *Including €60 mn of shares subject to interim order
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Financial Results 1H2013 – Highlights Income Statement Review Corporate actions during Resolution period Appendices Balance Sheet Review & Recapitalisation Restructuring
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which was selected for this transaction by the Hellenic Financial Stability Fund
expected losses for three years to June 2015 and other adjustments as determined by the Resolution Authority.
loans (and related collateral) of Bank of Cyprus’ branch in Romania to Marfin Bank
Net Assets Disposed € mn Loans and advances 7.770 Property and equipment 97 Customer Deposits (7.654) Total net assets disposed 213 Cash paid 1.153 Loss on disposal 1.366
Disposal of Greek operations
*Sale of the Greek operations of Bank of Cyprus Public Company Ltd Decree of 2013, Sale of certain operations in Romania of Bank of Cyprus Public Company Ltd Decree of 2013. All decrees were issued by the Central Bank of Cyprus in its capacity as Resolution Authority.
Disposal of certain assets & liabilities of BOC Romania
Net Assets Disposed € mn Net assets relating to customer loans and deposits 77 Other assets 5 Total net assets disposed 82 Loss on disposal 4
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deposits in Cyprus, including ELA funding of €9 bn
total share capital of the company- no goodwill arises from the transaction
UK branch deposits of €0,3 bn Acquisition in cash
Provisional fair value of assets and liabilities € mn Cash, balances with CB and placements with banks 2.856 Investments 2.569 Loans and advances to customers 8.645 PPE and intangible assets 118 Investments in subsidiaries and associates 107 Other 769 Total assets 15.064 Amounts due to banks 1.234 Obligations to central banks (ELA) 9.103 Customer deposits 4.178 Other liabilities 125 Total liabilities 14.640 Fair value of consideration transferred 425
Acquisition of Laiki’s certain operations
*Sale of certain operations of Cyprus Popular Bank Public Co Ltd Decrees of 2013. The fair value of the transferred assets and liabilities for the purposes of accounting for the business combination of the Group is provisional in accordance with IFRSs. Sale of certain operations in the United Kingdom of Cyprus Popular Bank Public Co Ltd Decree of 2013, All decrees were issued by the Central Bank of Cyprus in its capacity as Resolution Authority.
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Financial Results 1H2013 – Highlights Income Statement Review Corporate actions during Resolution period Appendices Balance Sheet Review & Recapitalisation Restructuring
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Rebuilding trust and confidence of both depositors and investors Preserving the Bank’s status as the cornerstone of the domestic economy, continuing to support both businesses and households Building a resilient institution, able to effectively manage its portfolio of assets and withstand further external shocks and economic turbulence Smoothly integrating Laiki’s operations, maximising impact on profitability for the combined entity through the realisation of synergies Enhance the capital adequacy of the Group by internally generating capital through profitability, deleveraging and disposal of non-core assets Restructuring Plan defines actions to create a safer, smaller, more focused institution capable of supporting the recovery of the Cypriot economy
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Annualised CY personnel costs (€ mn) Staff headcount in Cyprus Branch rationalisation – (branch numbers)
203 190 158 142 135
May-13 Jun-13 Sep-13 Nov-13 Dec-13
320 211 25 84
2013 pre- merger May-Jun 2013 Salary Cuts at BOC Jul-Aug 2013 2013 post VRS
2.417 2.369 3.616 3.356
6.033 5.725
Dec-12 Mar-13 After VRS
Laiki BOC
addressed: branches reduced from 203 to 142 (closed 61 branches); Plans to reduce branch network to around 135 branches by Dec-2013
salary cuts and a Voluntary Retirement Scheme (VRS)
2013; Full Time Employee reduction by 24% and personnel cost by 34% on an annual basis
4.355
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Managing loan quality deterioration – Recovery of problem loans Integrating Laiki Bank – Achieving operational efficiencies Making progress on non-core disposals Managing liquidity – Defending deposit franchise – Regaining trust
Exogenous factors such as the failure to implement the policy reforms requested by Troika that could affect and/or delay the disbursement of the financial assistance to Cyprus, a deeper and prolonged economic recession, further significant increase in unemployment, a sharper reduction in real estate prices as well as factors that could dent the fragile confidence of customers and delay the return of confidence to the Cyprus banking system could derail and affect the execution of the Restructuring Plan
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Credit Ratings: Fitch: Restricted Default (from 26 March 2013) Moody’s : Ca / NP / E (from 22 March 2013) Listing: ATHEX – BOC CSE – BOCY ISIN CY0000100111 From 19 March 2013, the shares of the Bank have been suspended from trading on ATHEX and CSE
Constantinos Pittalis, Head of Investor Relations, Tel: +357 22122466, Email: constantinos.pittalis@bankofcyprus.com Ioanna Shaili, Investor Relations, Tel: +35722122494, Email: ioanna.shaili@bankofcyprus.com Elena Hadjikyriacou, Investor Relations, Tel: +35722122239, Email: elena.hadjikyriacou@bankofcyprus.com
Eliza Livadiotou, Chief Financial Officer, Tel: +35722122344, Email: eliza.livadiotou@bankofcyprus.com
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Financial Results 1H2013 – Highlights Income Statement Review Corporate actions during Resolution period Appendices Balance Sheet Review & Recapitalisation Restructuring
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(€ mn) 1H2013 1H2012 yoy % Net interest income 430 387 +11% Net fee & commission income 84 88
FX income and net losses from financial instruments (26) (8) +225% Insurance income net of insurance claims 39 32 +22% Other (expenses)/income (27) 3
500 502
(173) (140) +23% Other operating expenses (112) (108) +4% Total expenses (285) (248) +15% Profit before provisions, impairments and restructuring costs 215 254
Provisions for impairment of loans and advances (539) (251) +115% Share of interest in associates 3
(321) 3
2 (12)
Profit attributable to non-controlling interests 5 4 +40% Loss after tax and before discontinued operations, impairments and restructuring costs (314) (5)
(35)
(90) (209)
(1.366)
(1.805) (134)
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€ mn % ytd 30.06.13 31.12.12 Cash and balances with central banks +2% 1.301 1.272 Placements with banks
1.711 1.769 Debt securities, Treasury bills and equity investments +82% 3.413 1.870 Net loans and advances to customers
23.769 24.375 Other assets +58% 2.762 1.746 Total assets +6% 32.956 31.032 € mn % ytd 30.06.13 31.12.12 Amounts due to banks 363 341 +7% Funding from Central Banks
+2% 620 608 Customer deposits
16.970 28.442 Debt securities in issue
7 45 Other liabilities
962 1.127 Subordinated loans stock
7 133 Total liabilities
30.036 30.696 Share Capital +160% 4.674 1.795 Shares subject to interim
CECS*
Revaluation and other reserves
27 106 Accumulated losses
(1.923) (2.500) Shareholders’ equity +998% 2.838 258 Non controlling interests +7% 82 78 Total equity +770% 2.920 336 Total liabilities and equities +6% 32.956 31.032
*Convertible Enhanced Capital Securities
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Gross Loans by Geography
31.12.12 (€ mn) 30.06.13 (€ mn) As % of total YoY (%) Cyprus 14.873 24.219 86% +63% Greece 9.438
2.025 1.794 6%
Other countries* 1.715 2.336 8% +36% TOTAL 28.051 28.349 +1% Other countries
United Kingdom 834 1.527 83% Romania 550 485
Ukraine 331 324
Deposits by Geography
31.12.12 (€ mn) 30.06.13 (€ mn) As % of total YoY (%) Cyprus 18.512 14.417 85%
Greece 7.152
1.254 1.153 7%
Other countries* 1.524 1.400 8%
TOTAL 28.442 16.970
Other countries
United Kingdom 1.215 1.295 +7% Romania 214 33
Ukraine 95 72
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14,9 15,0 14,9 14,9 14,9 24,2 10,0 9,8 9,7 9,5 9,5 0,0 2,0 2,1 2,1 2,1 2,0 1,8 2,0 1,9 1,8 1,7 1,7 2,3 28,9 28,8 28,5 28,2 28,1 28,3
31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 30.06.13
Other countries Russia Greece Cyprus Total (€ bn)
Other countries: Romania, Ukraine and United Kingdom
12,7 12,9 12,7 12,7 12,8 12,8 7,2 7,0 6,9 6,6 6,0 6,6 5,4 5,3 5,4 5,5 5,5 5,4 3,6 3,6 3,5 3,4 3,8 3,5 28,9 28,8 28,5 28,2 28,1 28,3
31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 30.06.13
Consumer Credit Mortgage SMEs Corporate Total (€ bn)
Loans by Geography Loans by Sector
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Excluding the impairment of GGBs, the change in fair value of related hedging instruments, the related taxation and restructuring costs
* Total expenses exclude restructuring costs of €35 bn, €22 mn of which relate to the cost of the Voluntary Retirement Scheme offered in Jan.2013 b.p. = basis points, p.p. = percentage points ; 100 b.p. = 1 p.p.
(€ mn) 1H2013 1H2012 yoy (%) Net interest income 340 291 +17% Net fee & commission income 66 67
Foreign exchange income and (losses)/gains from financial instruments (26) (12)
Insurance income net of insurance claims 34 27 +30% Other (expenses)/ income (5) 2
Total income 409 375 +9% Staff costs (133) (95) +41% Other operating expenses (71) (68) +4% Total expenses* (204) (163) +26% Profit before provisions 205 212
Provisions for impairment of loans and advances (457) (208) +120% Share of profit of associates 3
(249) 4
5 (9)
Loss attributable to non-controlling interests 1 2
(243) (3)
2,80% 2,26% +54 b.p. Cost/Income Ratio 49,9% 43,4% +6,5p.p.
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7,0 7,0 7,0 7,1 10,5 2,5 2,5 2,3 2,3 5,4 3,5 3,5 3,8 3,7 5,3 1,9 1,9 1,8 1,8 3,0 14,9 14,9 14,9 14,9 24,2
31.12.11 30.06.12 30.09.12 31.12.12 30.06.13
Corporate SMEs Mortgage Consumer Credit
Cyprus Loans by sector (€ bn)
+49% ytd 63% ytd +135% ytd +43 ytd +69% ytd 6,8 9,9 9,4 8,0 7,3 7,8 4,7
7,9 9,8 10,8 11,2 11,8 10,7 9,7 14,7 19,7 20,2 19,2 19,1 18,5 14,4
31.12.09 31.12.10 30.06.11 31.12.11 30.06.12 31.12.12 30.06.13
IBUs Non-IBUs
Cyprus Deposits (€ bn)
Bailed in amount of €3,8 bn
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(€ mn) 1H2013 1H2012 yoy (%) Net interest income 52 59
Net fee & commission income 14 16
Foreign exchange gains 3 2 23% Other income 1 1
Total income 70 79
Staff costs (28) (32)
Other operating expenses (25) (26)
Total expenses (53) (58)
Profit before provisions 17 21
Provisions for impairment of loans and advances (35) (25) +40% Loss before tax (18) (4) 325% Tax 4 (1)
Non-controlling interest (loss/(gain)) 4 2 +65% Loss after tax (10) (3) +280% Net Interest Margin (NIM) 5,05% 5,43%
Cost/Income Ratio 75,3% 73,2% +2,1 p.p.
b.p. = basis points, p.p. = percentage points ; 100 b.p. = 1 p.p.
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1,89 2,00 2,09 2,02 1,79 31.12.10 31.12.11 30.06.12 31.12.12 30.06.13
Loans by sector
Corporate 58% SMEs 17% Mortgages 3% Consumer Credit 22%
Russian Loans (€ bn)
Russian Deposits (€ bn)
1,12 1,29 1,25 1,25 1,15 31.12.10 31.12.11 30.06.12 31.12.12 30.06.13
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(€ mn) 1H2013 1H2012 yoy (%) Net interest income 39 37 +5% Net fee & commission income 5 5 +2% Foreign exchange income and gains from financial instruments (4) 2
Insurance income net of insurance claims 4 5
Other income (23) (1)
21 48
Staff costs (12) (14)
Other operating expenses (16) (13) +19% Total expenses (28) (27) +3% Profit before provisions (7) 21
Provisions for impairment of loans and advances (47) (18) +157% Non-controlling interest (loss/(gain))
(54) 3
(6) (2) +330% (Loss)/profit after tax (60) 1
132,8% 57,5% +75,3 p.p.
b.p. = basis points, p.p. = percentage points ; 100 b.p. = 1 p.p.
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90+ DPD ratios by Geography
Other countries comprise Romania and Ukraine and the United Kingdom.
13,5% 18,1% 16,5% 23,3% 28,1% 40,9% 11,9% 15,9% 20,2% 23,3% 29,0% 0,0% 9,4% 17,4% 16,6% 19,1% 24,5% 25,6%
12,4% 17,2% 18,0% 22,9% 27,4% 38,8% 31.12.10 31.12.11 30.06.12 30.09.12 31.12.12 30.06.13 Cyprus Greece Russia Group